Binding Waroona Energy Merger Agreement

Frontier Energy Limited (ASX: FHE; OTCQB: FRHYF) (Frontier or the Company) is pleased to announce the signing of a binding agreement with Waroona Energy Inc. (TSXV: WHE) (Waroona), creating one of Australia’s largest renewable energy companies, with potential for renewable energy generation in excess of 1GW.

Under the agreement, Frontier will acquire all the Waroona shares (the Transaction) not currently held by Frontier (Frontier already holds ~20% of Waroona) via a Canadian Plan of Arrangement (Share Plan), equivalent to an Australian Scheme of Arrangement. This follows the Letter of Intent signed in September 2023¹.

HIGHLIGHTS

• Key terms of the Transaction, and timetable to implementation, remain unchanged
  • Under the Share Plan, Waroona shareholders will receive 1 new Frontier Share for every 4.27 Waroona Shares held on the Share Plan record date
  • Upon implementation, Frontier Shareholders will hold approximately 69% of the Merged Group and Waroona shareholders will hold approximately 31%
• Offer unanimously recommended by Waroona’s Board of Directors
• Frontier will hold development approvals for total solar generation capacity of 355MW, with 120MWdc shovel ready, at its renewable energy project site in South West WA
  • Frontier’s 114MW Stage One solar generation capacity combined with Waroona’s 241MW solar capacity, provides a potential of 355MW of renewable solar power generation, with development approvals in place
  • Waroona engaged Incite Energy to conduct a DFS for a 120MWdc solar development², to be delivered early 2024
• Frontier’s freehold land footprint increases by more than 50% to 868 hectares
  • This substantially increases Frontier’s Project scale, enabling future renewable energy generation to +1GW of renewable energy generation
• Strengthened balance sheet including cash of ~$22 million³
• Combined project scale simplifies project financing and negotiations with equity participants, debt financing as well as potentially government grants
• Simplified communication with all key stakeholders, including government, local community, prospective financiers and shareholders to accelerate development

Frontier Managing Director, Sam Lee Mohan, commented: “Frontier shareholders are a step closer to realising significant value from this transaction, with the terms of the Letter of Intent now documented in a binding agreement, with the implementation date remaining December 2023.

Combining Frontier and Waroona sets the scene for a final investment decision in 2024 and provides the opportunity to develop a larger project in the fastest and most capital efficient manner, while also creating the critical mass required to secure financing.”

Transaction Summary Update

FHE and Waroona have executed a binding Arrangement Agreement whereby Frontier will acquire 100% of the shares not already held by Frontier via a Plan of Arrangement under the Business Corporations Act (British Columbia) (Share Plan), the equivalent of an Australian Scheme of Arrangement under Part 5.1 of the Corporations Act 2001 (Cth). Frontier currently holds ~20% of Waroona.

Under the Share Plan, Frontier will also acquire 100% of shares issued on conversion of options (Options) and restricted share units (RSUs). Frontier will acquire a total of approximately 622.5m Waroona shares. Waroona Shareholders will receive 1 new Frontier Share for every 4.27 Waroona Shares held on the Share Plan record date.

Upon implementation of the Share Plan, Frontier will have approximately 470.1m Shares on issue. Current Frontier shareholders will hold approximately 69.0% of the Merged Group and Waroona Shareholders will hold approximately 31.0% of the Merged Group.

There are also 91,461,474 Waroona Warrants on issue. Each Warrant is exercisable at C$0.14 and entitles the holder to one Waroona Share upon the exercise of the Warrant. Frontier and Waroona have agreed for these Warrants to be converted to Frontier options, at a conversion ratio of 4.27, with the exercise price also being converted at a ratio of 4.27. As such, 21,419,549 new Frontier options will be issued, with an exercise price of approximately 68.5c⁴.

The Arrangement Agreement provides for customary deal-protection provisions, including customary representations, warranties, covenants and conditions contained in agreements for transactions of this nature including non-solicitation and lock-up provisions, business restrictions and a no material adverse change clause. The directors and senior officers of Waroona, owning in aggregate approximately 2.5% of Waroona’s voting securities, have agreed to vote all the securities they own or control in favour of the Transaction.

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